Federal Reserve Chairman Jerome Powell says the central bank will not “overreact” to fiscal policies, as rate changes remain on hold amid uncertainty in the economic outlook at home and abroad.

Responding to a question from Yahoo Finance about the appropriate balance of monetary and fiscal policy at the moment, Powell said Wednesday he thinks of fiscal policy as “exogenous,” or independent of its own decision making.

“Whatever happens with fiscal policy, we take that. We don’t evaluate it, we don’t criticize it and we don’t overreact to it either,” Powell said. “So I think it’s just a fact, it’s just an external fact about the economy.”

But market participants are left wondering: if nothing stimulative comes of fiscal policy and the Fed remains sidelined on any rate changes, would combined inaction effectively allow the economy to slowly slip into slowdown?

Changing roles of monetary and fiscal policies

During 2018, the Fed hiked four times as the Trump tax cuts were taking effect. The president publicly criticized Powell’s decision to raise rates on a number of occasions, claiming that his policies would have been more stimulative if rates were lower.

A divided Congress and a White House fixed on immigration appear to have no further stimulative fiscal policies on the table, with little progress being made on an infrastructure bill. The benefits of the tax cuts are also fading, all as the Fed doubles down on its dovish stance on rate hikes.

Although Powell said the Fed isn’t too sensitive to fiscal policy changes, market participants have made note of situations where the central bank has reacted to fiscal policies.

For example, concerns over an overheating economy prompted the Fed to commit to a path of “gradual rate hikes” through 2018, as policymakers worried that inflation could run away.

Goldman Sachs now sees the Fed doing the exact opposite, as the Fed points to “muted” inflationary pressures and concerns abroad. In a March 15 note, Goldman Sachs added that the waning effect of the tax cuts led to the tightened financial conditions that pushed the Fed to turn dovish.

“Coming on top of a deteriorating global growth picture and a fading fiscal boost, the tightening in financial conditions heightened downside risks for an otherwise healthy US Economy,” Goldman wrote.

Nomura writes that if anything, fiscal stimulus now provides more downside for the economy. In a March 8 note, they cite “protectionist US trade policy” and a looming fiscal cliff in the fall as limiting the ability of fiscal policy to keep economic growth going.